The insurer predicts that there will be a spectrum of challenges worldwide that will boost coverage importance.
According to a recent report issued by Allianz Commercial with regards to Directors and Officers (D&O) business liability insurance, there are so many challenges occurring worldwide that it is unlikely that the market’s soft conditions will be able to continue.
Some of the largest threats to this type of coverage are expected to worsen as 2024 gets going.
The authors of the Allianz Commercial 2024 D&O Insurance Report predicted that professional lines would be some of the products least impacted by the hard market conditions that developed throughout 2023. That said, it also went on to say that this ongoing condition for business liability insurance could change as 2024 continues.
“Buyers of D&O insurance from public and private companies have benefited from favorable pricing and broader coverage through 2023, helped by factors such as new market entrants and the stable trend in US securities class action filings,” said the Financial Lines global head at Allianz Commercial in a media release. “However, there is still a lot of risk facing D&Os and their insurers. Inflation continues to bite, influencing future claims through larger settlement values — at a 10-year high — and greater defense costs. The higher cost of refinancing debt is proving a shock. Insolvencies are rising, geopolitical uncertainty is considerable, cyber risk is elevated, and ESG claims are here to stay and proving challenging.”
Allianz pointed to a number of global developments that are changing the game for business liability insurance.
In the report, the company pointed out that the globe has arrived at a challenging “new normal” following the worst of the pandemic, mainly propelled by economic difficulties.
“Economic growth across the globe remains disappointing,” said Allianz in the business liability insurance report. “Business insolvencies are expected to rise by +10% in 2024… Inflationary pressures remain, and refinancing of existing debt after years of low interest rates is a new test for many.”
Geopolitical tensions remain high at the moment, particularly in the case of (though not limited to) the two wars that are ongoing in Ukraine and the Middle East.
